Recovery of Legal Fees and the Voluntary Payment Doctrine

March 25, 2014 18:40 ET | Source:JSBarkats PLLC

NEW YORK, March 25, 2014 (GLOBE NEWSWIRE) -- JSBarkats PLLC, a law firm headquartered in the heart of Manhattan, NY announced today its successful outcome in the case of Sills Cummis & Gross P.C. v. Advance International, Inc.In its decision in the case, pending in the Supreme Court for the State of New York, County of New York, Justice Shlomo Hagler denied a motion to dismiss Advance International Inc.'s counterclaim for recovery of legal fees it previously paid to the plaintiff. Sills, the plaintiff filed a motion to dismiss the defendant's counterclaim for recovery of legal fees it had previously paid to Sills in connection with its previous representation. Sills argued to the Court that the Voluntary Payment Doctrine precluded Advance from now seeking to recover its payments to Sills.

The Voluntary Payment Doctrine stands for the proposition that once a payment is made in a commercial setting, a party can no longer seek to recover such payment in the absence of fraud or mistake of material fact or law. It has been said that the rationale for this doctrine is designed to preclude a party from simply paying the charges without any inquiry, and then after-the-fact attempting to seek reimbursement. Indeed, "a party should take its position at the time of the demand, and litigate the issue before, rather than after, payment is made."1 Advance argued that the Voluntary Payment Doctrine does not apply to an attorney-client relationship, reasoning that an attorney has a special relationship with a client that is governed by a professional responsibility rules and attorney's fees must be both reasonable and transparent.

Justice Hagler ruled in favor of Advance and denied Sill's motion to dismiss Advance's counterclaim, holding that if attorney fees are disputed, a decision should be made by the courts or by arbitrators. The court agreed with Advance's argument that a client has the right to seek to recover payment of legal fees that have previously been paid to its attorneys and therefore Advance's counterclaim was entitled to stand.

Andrew P. Lederman, Esq., a partner at the law firm of JS Barkats PLLC represented Advance International Inc., in connection with the motion. Mr. Lederman can be reached at JS Barkats PLLC located at 18 East 41st Street New York, New York 10017, telephone number (646) 502-7001 and by email at ALederman@JSBarkats.com. For additional information, you may contact our attorneys at Info@JSBarkats.com www.JSBarkats.com

JSBarkats PLLC is a dynamic full-service law firm, headquartered in the heart of New York specializing in Corporate, Capital Markets and Securities law, Real Estate, Intellectual Property, and Commercial disputes and litigation. With 20+ attorneys located in New York and affiliated offices worldwide the firm caters to investors, entrepreneurs and small cap companies and represents a multitude of clients with complex real estate and commercial disputes. http://www.JSBarkats.com P: (646) 502-7001

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